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Committee hears HHS budget pressures: FMAP, Medicaid expansion and home and community-based services increases
Summary
Fiscal staff told the committee Medicaid and HHS spending are the largest drivers of general fund growth, highlighted the Federal Medical Assistance Percentage (FMAP) implications and noted significant proposed increases for home- and community-based services tied to litigation-driven service requirements.
Legislative fiscal staff told the House Appropriations Committee that Health and Human Services remains the largest general fund cost and that federal matching rates and program utilization will be key budget drivers.
Alan Knudson said the department accounts for more than 80% of the major general fund appropriations combined with three other large agencies and that Governor Burgum's recommendation would raise HHS general fund appropriations roughly 15 percent. "The general fund appropriation for the department is going up about 15.5 percent in the executive budget," Sheila Sandness later summarized.
Knudson explained FMAP — the federal matching percentage for Medicaid — saying the state's FMAP had been at the statutory floor in recent years and that the executive book estimated FMAP of 50.99% for 2026. He noted enhanced federal FMAP during COVID phased out and that Medicaid expansion carries a higher federal match (the expansion match was described as 90% during the discussion).
The Burgum recommendation increases funding for home- and community-based services after a Department of Justice matter, with the county/state shift and added services driving cost increases. Knudson described major Medicaid cost centers as developmental disabilities, nursing homes, hospitals, professional services and drugs.
Committee members asked several operational questions: whether FMAP estimates will be available during the first half of session (staff said preliminary FMAP for 2027 arrives in April and that the conference committee calculation timing limits early adjustments) and whether human services caseloads and expansion drops have firm numbers (staff suggested department numbers exist but were not provided in the meeting).
Why it matters: Medicaid and HHS appropriations are the largest single category of general fund spending, and small shifts in FMAP or caseload assumptions change state-dollar obligations materially. Knudson estimated each percentage-point FMAP change would mean roughly $15–20 million per year of state cost change.
Sources: Testimony and summary remarks by Alan Knudson and Sheila Sandness; committee member questions and staff responses.
